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It is entirely possible to include the letters Å, Ä and Ö in your domain name. This depends primarily on which top-level domain (.se, .eu, .org…) you want to use, as some top-level domains do not allow certain characters.
An important thing to keep in mind is that you need to enter the domain using its technical representation (for example, smör becomes xn--smr-tna) when adding it to a web server.
Some platforms and channels have difficulty handling å, ä and ö, which can result in broken links. It can also cause issues with email. It is therefore important to consider this before choosing a domain name that includes these characters.